EMERGENCY BUDGET 2010: VAT rate to hit 20% in 2011
22 June 2010
Author: Tristan Young
VAT will rise to 20% from 4 January 2011, up 2.5% points over the current level and 5% points up on last year's rate.
The announcement was the centerpiece of Chancellor George Osborne's Emergency Budget today.
The hike in VAT will raise £13bn a year by the end of the current parliament, according to Osborne. The increase will have a significant impact on the price, including P11D, of cars.
Announcing the measure the Chancellor added: "That is £13bn pounds we don't have to find from extra spending cuts or income tax rises."
Commenting on the VAT rise Neville Briggs, managing director, CFC Solutions, said: "Overall the Budget is every bit as tough as we had been warned. The question is whether the more swingeing moves such as the 20% increase in VAT will inspire businesses to work successfully within a new atmosphere of austerity or tip the economy towards something close to a double dip recession.
"It's very much down to all UK businesses to make sure that the latter doesn't happen. The accent for fleets will very much be on increasing still further the level of cost control that has been achieved since the start of the recession while getting the most out of existing assets, and we will be working very closely with them to help achieve this."
Follow BusinessCar on TWITTER